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Rich Canadians are outliving the poor, strikingly so among men

The Globe and Mail with Tammy Schirle 23 August 2018

Rich Canadians are outliving the poor, strikingly so among men, a new study shows.

Parsing 50 years of Canada Pension Plan data, thus excluding Quebec, researchers Kevin Milligan and Tammy Schirle said in their C.D. Howe Institute paper that Canada’s highest-earning men are outliving the lowest-earning men by eight years, or by more than 10 per cent.

For women, the rich-poor gap is three years.

Professor Milligan, of the University of British Columbia’s Vancouver School of Economics, and Professor Schirle, of Wilfrid Laurier University said this is the first study of its kind.

The study of Canadians born between 1923 and 1955 breaks down like this: Life expectancy among men ranges from 75 among low-income earners to 86 among those at the top. Among women, the numbers are 83 and 86, respectively.

There could be several reasons for this, but that’s not the point of their paper.

“We do not have evidence that the earnings-longevity relationship is causal – those with higher earnings may have higher education, different health habits and other characteristics that drive their longevity more than the income itself,” they said, noting their work has policy implications in this era of people living longer.

“Until now, however, there has been no study of long-term changes in longevity across earnings groups in Canada,” said Professor Milligan and Professor Schirle. “This matters because with those extra years of life come some costs such as pensions, healthcare, and other age-dependent expenditures.”

They noted, too, that “improvements in longevity” span all income groups.

Of course, the proportion of women in the work force has also increased since the era they studied. But, the researchers added, “because many women born between 1923 and 1955 did not have a strong attachment to careers outside the home, many of those in the lower earnings groups would have resided in households with substantial lifetime family earnings.”

Their work will, no doubt, be required reading for actuaries.

“As one example, the policy impact on pensions is direct,” they said.

“If those who are living longest are the ones with the highest annual pension benefits then the total costs of the pension payouts may be higher than expected,” they added.

CIBC raises dividend

Canadian Imperial Bank of Commerce followed Royal Bank of Canada in raising its dividend amid higher third-quarter profit.

CIBC increased its quarterly dividend to $1.36 from $1.33, following a dividend hike by RBC Wednesday as it kicked off the latest round of bank earnings.

CIBC profit rose in the quarter to almost $1.4-billion, or $3.01 a share, from $1.1-billion or $2.60 a year earlier.

On an adjusted basis, earnings per share, diluted, rose to $3.08 from $2.77.

National Bank Financial analyst Gabriel Dechaine called the results a “solid quarter all around,” with “exceptionally strong” Canadian retail and small business banking.